US Consumer Prices Edge Higher in September, 12-Month Inflation Down 1.3%

US consumer prices inched slightly higher but at a slower pace in September than in August, government released data revealed Thursday.

The Consumer Price Index rose 0.2% last month following a 0.4% increase in August, according to the latest monthly CPI report from the Labor Department. Excluding volatile food and energy prices, the so called core CPI also increased by 0.2%. The same August reading was up by 0.1%.

The latest data again eases concerns of rising inflation — at least for now — as a result of the Fed injecting an unprecedented amount of money into the US economy to stir the recovery.

"Today’s figures won’t shift the argument about inflation risks at the Fed. They don’t show deflation, but nor do they show sufficient inflation pressures to make the doves want to tighten soon," Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts, was quoted on Reuters.

12-Month Inflation Drop

The CPI data also shows that annual inflation has fallen 1.3%. That compares to the 1.5% annual decline seen in August, and the 2.1% drop in the 12 months ending in July, which also marked the sharpest annual fall since 1950.

Core annual inflation rose 1.5% from September 2008 following the 1.4% increase in the 12 months ending in August, which was the smallest year-over-year gain since February 2004. The 1.5% figure is well within the Federal Reserve’s traditional comfort range of between 1%-2%.

Consumer price details

Rising September prices include:

  • Energy prices rose 0.6% after a 4.6% increase in August
  • Gasoline prices increased 1.0%, which compares to the 9.1% increase from the month prior
  • Electricity costs were up 0.6% after a 0.1% decline in August
  • Dairy and related products rose 0.5% in September, breaking a nine-month declining streak
  • New vehicles prices, which fell 1.3 percent in August, rose 0.4 percent in
    September
  • Used car and truck prices rose sharply by 1.6%. They increased by 1.9% in September
  • Clothing prices rose 0.1% after a decline of 0.1% the month prior
  • Public transportation costs rose 2.1%
  • Airfares jumped 3.4% following a 1.7% increase in August
  • Tobacco prices rose 1.0% in September and have risen 26.1% since February
  • Lodging away from home prices rose 1.5% after a 0.5% increase

Declining September prices include:

  • Meats, poultry, fish and egg prices fell 1.2% after the 0.4% increase in August
  • Fruits and vegetables were down by 1.2%, following a 0.7% decline
  • Natural gas prices declined 1.7%. They were up 0.4% in August

Housing prices, which accounts for about a third of the CPI index, were unchanged following a 0.1% increase in August.

On Tuesday, Oct. 20, the Labor Department will release the Producer Price Index, which measures prices at the factory door and inflation pressures before they reach the consumer.

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